02 February 2019 10:00 AM

Saturday PS: A sigh of relief

IT occurs to me that fiscal conservatism, as with every other sort of conservatism, may be something to which one is increasingly prone with age. Or could it be that my previous vested interest as an economics correspondent in a complex and ever-changing landscape of taxing and spending has long since lapsed.

Anyway, my reaction to reading about a report by the Resolution Foundation earlier this month (reading about it, not the thing itself, which I could find nowhere on the think tank’s website) calling for various tax reliefs to be pruned if not axed was probably not the one for which the foundation was looking.

Why, I thought, should there be any tax reliefs at all?

At school, whenever someone tried too hard to say something shocking (“Max Bygraves is actually better than Lou Reed”) there would be a derisory chorus of: “Oh, you’re so controversial.” There’s always the danger of triggering a similar reaction now.

To avoid that, let’s look at some of the reliefs at which the Resolution Foundation took aim. One of these is called Entrepreneurs’ Relief, which cuts to ten per cent the Capital Gains Tax payable on the sale of a qualifying business.

Why? I thought entrepreneurs were buccaneering risk-takers whose reward would come with the value created by their efforts. This applies to all the tax reliefs designed to promote “enterprise”. It seems a little odd that these rugged individualists, or their backers, need a helping hand from the Government.

Supporters of such reliefs point to the high failure rate of new businesses, which may ordinarily deter people from backing them. True, but basic financial theory suggests that the winners in a portfolio of start-ups ought to compensate at least for the losers.

The answer is for backers to have a spread of investments, not to be given special fiscal treatment.

Saving, like enterprise, is another Good Thing that the Treasury is keen to promote, thus we have Individual Savings Accounts (ISAs) of which the foundation is not fond, considering them “poorly targeted and expensive”.

But why do we have them at all? If tax on savings income is thought to be deterring savers, then reduce it, or have a higher starting point, or both. What we don’t need are special tax-exempt vehicles.

I sort-of part company with the foundation when it suggests that low taxation in some areas is itself a form of relief. Council Tax in relation to more expensive properties is one example.

Then there are the tax breaks available to charitable organisations. I never gave them a second thought until, many years ago, Andrew Alexander in the Daily Mail pointed out that the Good Samaritan had not asked for a Gift Aid form.

No, quite. And charitable tax relief takes us to the other side of the equation, the regulation needed to ensure fiscal breaks are not being misused. We see this whenever the Charity Commission investigates complaints of a charity engaging in political activity, or when independent schools are told they must “do more” to justify charitable status.

Get rid of the lot: red diesel for farmers, special reliefs for the manufacture of quaint foodstuffs or drink (craft cheese, pear brandy and the rest), “enterprise zones” that merely draw business activity away from non-zone locations, assorted reliefs for investors in the Alternative Investment Market (as with “alternative theatre”, the A-word here translates as “mainstream and State subsidised”).

See what I mean about fiscal conservatism?

Saturday miscellany

HARDLY had last week’s item, with its well-meant suggestions for turning round the ailing quality press been posted, than additional thoughts suggested themselves. In no particular order:

Sack anyone who has produced articles along the lines of “could brain surgery/air-sea rescue/woodland conservation/any other occupation be facing its MeToo moment”?

Publish precisely no articles written by front-bench politicians – we all know what they are going to say.

Ban the following words in the following contexts: tackle (as in “tackling knife crime”), boost (as in “a boost to the economy”), time bomb (as in “the obesity time bomb”), epidemic (see “time bomb”).

Ban the expression “furious row”, given it is usually used about staged disagreements between professional politicians.

Instruct your interviewers that they are to appear nowhere in the articles they produce – no more “as he greets me, I am struck by…”

STILL in the world of publishing, don’t bother buying this week’s edition of The Spectator. On top of three separate bits of anti-Brexitry (Matthew Parris, the business column and the irritatingly right-on radio critic) we have Ian Rankin, creator of Inspector Rebus, in the diary: “In my latest book, the only pro-Brexit voices are those of my gangsters, the very definition of disaster capitalists.” So don’t buy the new book either. That’s the thick end of £25 I’ve just saved you.

I wonder how Chris Skidmore MP is settling into his new-ish job as Minister for higher education. He got the job in December, and has probably by now grasped the full range of his responsibilities. These are (a) to demand universities allow free speech but then to do nothing about it, (b) to insist that “Mickey Mouse courses” be ditched, and then to do nothing about it and (c) to say constantly that “British universities are world-class” and “one of our greatest exports”. Not hard is it, really?